Rankin sues housing agency over unpaid severance

By Mike Morris |
May 1, 2012
| Updated: May 1, 2012 7:00pm

Guy Rankin IV, former housing CEO, is accused of fraud by the Harris County Housing
Authority

Former Harris County Housing Authority CEO Guy Rankin IV has sued the agency for breach of contract, seeking $137,000 in severance its board agreed to pay him in March but then delayed, saying it did not have the cash to pay.

Rankin also is seeking $54,800 in attorney fees, plus court costs and interest until the severance is paid, according to court documents filed late Monday.

Rankin's buyout agreement, which brought a tumultuous end to his eight years in charge of the authority on March 21, specified that he be paid within a week. However, HCHA interim CEO Tom McCasland informed board chairman Beto Cardenas on March 28 that the agency had no unrestricted cash on hand to make the payment.

Lack of response

Rankin's attorney Benjamin Hall said he and his client had hoped to avoid litigation, but the suit became inevitable when he received no responses from HCHA.

"Quite frankly, I don't understand this from a policy standpoint or as a taxpayer, unless there's just a sense of stubbornness that's not well-founded in the facts," Hall said. "This could easily have been treated as a severance and paid out of payroll. Even a call to say, 'Look we're going to get the money in a certain window of time,' or, 'Allow us some leeway to find a way out of this.' "

Cardenas said he had not been served with the suit, but welcomed an airing of the facts and said the authority will respond with an eye to protecting taxpayer dollars.

"I have no experience misrepresenting the authority's finances," Cardenas said. "However, their desire to get paid before we provide affordable housing and fix the problems we have inherited, in my opinion, is quite repulsive."

HUD inquiry

In presenting his review of the agency's books, McCasland said his predecessors misled board members by inflating HCHA's assets by at least $5.8 million. The skewed numbers, he said, included millions in hoped-for bank credit that would have had to be repaid and $1 million in improvements to an office the agency does not own and has not leased in more than a year.

The U.S. Department of Housing and Urban Development's Office of Inspector General served the authority with a wide-ranging subpoena on April 18, seeking reams of documents, including personnel and payroll records, bank statements, receipts and vouchers, as well as all paperwork related to investments, procurement, contracts, correspondence with contractors and tax records. Sources close to the probe have said FBI agents are assisting HUD in its work.

A team from HUD first arrived at the authority in March after a Houston Chronicle story showed the agency hired friends and relatives of employees. That story followed other reports showing executive salaries rose sharply under Rankin, that the agency poured millions into a defunct development and spent lavishly on questionable items.